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Asean Affairs        16  May 2011

Thai footwear industry awaits AEC

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Chanin Jitkomut has high hopes for the Asean Economic Community (AEC) in 2015, as he intends to make Thailand the regional footwear leader as president of the Thai Footwear Association.

"The premium segment is where we will be able to compete, and it's the only path for industry survival. We will not, for instance, see genuine leather shoes from China that are cheap," he said.

Chanin said by maintaining relationships with other Asean countries including through projects and fairs, Thailand will be able to portray itself as a country of high-quality labour and goods, thereby building up brand awareness and loyalty.

Globally, China is now the top exporter of footwear, followed by Vietnam and Indonesia. Thailand is ranked seventh or eighth globally and sixth in Asean, with exports mainly to the US, Italy, Singapore, Hong Kong and the EU, particularly Denmark and France.

"What makes me confident [about achieving leadership] is the decreasing role of mass-produced items. Stricter anti-dumping measures by the EU and the US have also triggered a shift in orders from China to Thailand," said Mr. Chanin.

He said the AEC would also allow manufacturers to choose from among a greater variety of raw materials, resulting in lower costs.

Chanin expects Thai footwear exports to increase by 10-20 percent this year from 14 billion baht (US$455 million) last year.

Under the AEC, export value will increase to 40-50 billion baht.

For example, Taiwan, the top Asian investor in footwear, will up its investment in Thailand since its current investment in China is facing environmental and dumping problems, said Mr. Chanin.

Local footwear manufacturers will also benefit from rules of origin, as parts imported from other countries will be assembled in Thailand and declared a Thai product. However, Mr. Chanin warned the labour crisis will worsen under the AEC, as foreign workers may switch to other countries.

The footwear industry, which now employs 200,000 mostly foreign workers, is short by at least 20,000.

"We need twice the amount if we want to become No. 1 in Asean, and for that we need to make workers stay with us by providing incentives such as health care and other benefits."

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